Constraints in Education and Labor Market Entry

This dissertation addresses the effects of constraints in education, particularly in the transition from completing education to entering the labor market. Chapter 1 examines the effect of merit aid scholarship programs and student loans on labor market outcomes after graduation. Qualifying for merit aid programs leads to a dramatic decrease in student loans as well as a decrease in salary income one year after graduation. Using merit aid eligibility as an instrument for loans, I find that graduates with higher loans have higher income after graduation, in sufficient magnitudes to offset the amount of their loans within two to three years of graduation. Examining the heterogeneity of the results with respect to ability and family income suggests that these results are generated by short term credit constraints after graduation.;Chapter 2 explores the long run impacts of child labor by studying changes in minimum working age laws and compulsory schooling laws in the early 20th century United States. By using both types of laws I separately identify the effect of delaying labor market entry by one year from the effect of gaining an extra year of schooling. I find that the effect of being able to start work a year earlier on adult income in 1940 is in fact positive and is roughly equal to the benefit of an extra year of school. This suggests that children and families during this time period were rationally substituting between school and work, and that the positive impacts of work should be accounted for when designing modern policy to limit child labor.;Chapter 3 examines the enrollment, funding and graduation rate impacts of the introduction of broad-based state merit aid scholarship programs. I find that while enrollments and graduation rates increase somewhat, these increases are dependent on the generosity of the scholarship programs, and are largely the result of students switching schools within the state, rather than the result of new students enrolling. I also find that at public schools, state merit aid funding displaces institutional funding, but complements federal need based grants, suggesting that lower income students are positively impacted by the programs.